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Commodores Entertainment Corp. v. McClary

United States Court of Appeals, Eleventh Circuit

January 9, 2018

COMMODORES ENTERTAINMENT CORPORATION, Plaintiff - Counter Defendant-Appellee,
v.
THOMAS MCCLARY, FIFTH AVENUE ENTERTAINMENT, LLC, Defendants -Counter Claimants -Third Party Plaintiffs -Appellants, DAVID FISH, et al., Third Party Defendants.

         Appeal from the United States District Court for the Middle District of Florida D.C. Docket No. 6:14-cv-01335-RBD-GJK

          Before MARCUS, MARTIN, and NEWSOM, Circuit Judges.

          MARCUS, Circuit Judge:

         In this common-law trademark case, Thomas McClary appeals from an order granting judgment as a matter of law to Commodores Entertainment Corporation (CEC) and converting a preliminary injunction into a permanent one against McClary and his corporation, Fifth Avenue Entertainment, LLC. The dispute concerned ownership of the mark "The Commodores, " the name of a famous Grammy Award-winning rhythm and blues, funk, and soul music band. McClary was an original member of The Commodores, but, by his own admission, he "split from the band" in 1984 to strike out on his own in the world of music. He later formed a musical group that performed as "The 2014 Commodores" and "The Commodores Featuring Thomas McClary." When CEC -- a corporation run by two original Commodores who remain active with the group -- found out about McClary's group, it filed this lawsuit against McClary and Fifth Avenue claiming trademark infringement, trademark dilution, passing off, false advertising, and unfair competition.

         The district court granted CEC a preliminary injunction and enjoined McClary from using the marks; a panel of this Court affirmed. Then, after a two-week trial, the district court granted judgment as a matter of law to CEC and converted the preliminary injunction into a permanent one. McClary and Fifth Avenue appeal that order, as well as the district court's oral ruling denying their motion to dismiss for failure to join an indispensable party.

         After careful review, we hold we lack jurisdiction to review the denial of the motion to dismiss and that the district court did not abuse its discretion in excluding expert testimony from an attorney who proffered only legal conclusions. We also conclude that when McClary left the band, he left behind his common-law rights to the marks. Those rights remained with CEC. Moreover, we conclude that the scope of the injunction was not impermissibly broad, that McClary's arguments about the validity of the federal registration of the marks are irrelevant to this determination, and that McClary did not establish any affirmative defenses. Accordingly, we affirm.

         I.

         A.

         The Commodores was formed in 1968. The group has released over forty albums, has charted seven number-one singles and numerous top-ten hits, and continues to record music and play for audiences around the world. The group's big break came in 1971, when it opened for the Jackson 5 on a world tour. Shortly after the tour, the group signed a recording contract with Motown Record Corporation. The group's first album, "Machine Gun, " was released in 1974. Throughout the 1970s, The Commodores became internationally acclaimed with hits including "Easy, " "Brick House, " "Three Times a Lady, " and "Too Hot ta Trot."

         Although three other individuals were also involved at the early stages of the group, the "original" members are generally regarded as William King, Ronald LaPread, Thomas McClary, Walter Orange, Lionel Richie, and Milan Williams.[1]On March 20, 1978, these six members, along with their manager, Benjamin "Benny" Ashburn, formed a general partnership governed by a General Partnership Agreement. The agreement included a section expressly addressing the use of the name "The Commodores" upon the withdrawal of a partner: "Upon the death or withdrawal of less than a majority of the Partners, the remaining majority of the Partners shall continue to have the right to use the name THE COMMODORES for any purpose." Each partner was permitted to withdraw at any time so long as he provided the group with six months' written notice; notably, one partner's withdrawal would not end the partnership. Two months later, the partners registered CEC as a Nevada corporation.

         Around a year later, in 1979, CEC entered into an Exclusive Artist Production Agreement with Motown Record Corporation. This agreement also restricted use of the name: band members could perform as "sidemen" for other artists and groups, but "in no event" could they use the name "Commodores" in connection with that engagement. And the members and the group as a whole were, "joint and not severally, the sole and exclusive owner of all rights in and to the Name." Much like the General Partnership Agreement, this agreement provided that if a member withdrew from the group, neither he nor his heirs would have the right to make individual use of the name. In addition, if "one or more Members [became] a Leaving Member(s), then the Remaining Member(s) [would] automatically and without notice become (jointly and not severally) the sole and exclusive owner of the rights" to the name.

         In 1982, Lionel Richie left the group to pursue his solo career; The Commodores continued without him and notified Motown of the change. CEC and Motown entered into a new agreement whereby CEC again "warrant[ed] and represent[ed] that it and [the signee] [were], jointly and not severally, the sole and exclusive owner of all rights in and to the Name" and that "its agreement with the Group provide[d] that no Leaving Member, nor heirs of any member have or will have the right to make any individual use of the Name." This agreement described "Leaving Members" as a member or members who "separate[d] from, and/or ceased to perform with, the remaining Member(s)."

         Around the time that Richie left the group, Ashburn passed away. In March 1984, the remaining members of the group (King, LaPread, McClary, Orange, and Williams) executed an "amendment in toto" to the General Partnership Agreement that read this way, in part:

The principal business activity of the Partnership no longer is to engage in the entertainment business as the Group but is to own, maintain and lease certain motor vehicles and musical and studio equipment to Commodores Entertainment Corporation, a Nevada corporation, (the "Corporation"), which now conducts the business of the Group, and to hold all rights in and to the Group name "THE COMMODORES, " the logo thereof, and any service mark, trademark, service name, or tradename associated therewith, and all goodwill inherent therein (collectively referred to as the "Group Name").

         Like the other contractual arrangements, this amendment also clarified the use of the group's name: "Upon the death or withdrawal of less than a majority of the Partners, the remaining majority of the Partners shall continue to have the right to use the Group Name for any purpose."

         Later in 1984, and by his own admission, McClary "split from the band" to pursue his own solo career. On August 6, 1984, McClary allegedly sent a letter confirming his withdrawal from the band to King, LaPread, Orange, and Williams, as well as to several lawyers affiliated with the group. The letter was addressed to Lawrence J. Blake, a lawyer who had done legal work for The Commodores. It read in full: "I hereby confirm my withdrawal from the Commodores Effective as of May 31, 1984. I have certainly enjoyed fourteen years of being with you guys and I wish you the best." The letter was on the letterhead of "Thomas McClary Productions, Inc." and was marked with Blake's firm's "received" stamp, which

          Blake later swore was part of the firm's procedure to indicate when documents were received. However, McClary said that he had not seen the letter until the lawsuit began. At the later trial, McClary presented a forensics expert who testified that it was "highly probable" that the signature on the letter was not McClary's.

         Although the formalities of McClary's departure are contested, it is undisputed that McClary did not perform with The Commodores from 1985 through 2010. Soon after McClary's departure, J.D. Nicholas joined the group. In 1986, The Commodores received its only Grammy for the single "Nightshift." McClary had no part in that single and did not receive the Grammy with the group.

         Over time, LaPread and Williams also departed from the group, leaving King and Orange as the only remaining original members. At some point, King and Orange transferred their common-law trademark rights in The Commodores' name and logo to CEC. In 2001, CEC registered four trademarks ("the marks" or "the Commodores marks") with the United States Patent and Trademark Office (PTO). The trademarks were for the word mark "THE COMMODORES" and the word mark "COMMODORES" with a design. They granted CEC exclusive rights to the marks for "[e]ntertainment services, namely live performances by a musical and vocal group, " as well as for "[m]usical sound and video recordings, namely, pre-recorded audio cassettes, video tapes, compact discs of live and in-studio musical performances." For three of the marks, first use was listed as April 1, 1972; first use in commerce was on April 30, 1972. For the fourth mark, first use was listed as December 31, 1968; first use in commerce was on the same day. The marks were renewed in March 2010, and are still active and in use today.

         In 2002, King, Nicholas, and Orange executed an amended and restated partnership agreement for a new partnership, Commodores New, LLP, so that Nicholas could also share in the partnership. This agreement recounted that the partners had previously agreed to "transfer ownership of the trademark and/or service mark 'COMMODORES'" to CEC.

         B.

         This lawsuit arose out of McClary's allegedly improper use of the marks. After leaving the group in 1984, McClary signed a solo contract with Motown and released a solo album. He eventually formed his own recording label and released another solo album in 2008. Then, in 2009, McClary performed with Richie and LaPread at the Superdome in New Orleans. McClary's wife sent an email advertising the show as a Commodores reunion, and David Fish, the manager of the original Commodores, received the email. On June 8, 2009, CEC wrote to McClary declaring CEC's ownership of the name and stating that McClary had "no right to make any announcement about or use the name Commodores." McClary never responded.

          In 2010, McClary was asked to fill in as a guitar player when The Commodores' regular guitar player became ill. McClary appeared with The Commodores two or three times and signed autographs with The Commodores' members. McClary never appeared with the group on any other occasion. At no point did McClary ask to rejoin the group, and the group never offered him membership. In 2011, McClary hosted a "listening session" at his home in Orlando that several original members of the group attended. In planning the listening session, McClary thanked Fish for "bringing The Commodores to the table." This session was meant to be an opportunity to brainstorm and develop new songs, but ultimately The Commodores and McClary did not release any songs from this session.

         Nothing further happened until 2013, when McClary formed the group "Commodores Featuring Thomas McClary." He and his wife also established Fifth Avenue Entertainment to conduct entertainment-oriented business; Fifth Avenue is the manager of "Commodores Featuring Thomas McClary." McClary's group began performing under the names "Commodores Featuring Thomas McClary" and "The 2014 Commodores, " and he scheduled a performance at a New York venue on July 6, 2014. On June 5, 2014, King learned of this engagement when a friend called to ask about the performance, thinking that it was an official Commodores show. King and Orange realized that this was McClary's band and, the same day, their manager contacted the executive director of the venue. The executive director said he thought he had booked the Grammy Award- winning Commodores -- not a tribute or cover band featuring a former member.

         On June 10, CEC received a cease and desist letter from McClary's wife. She claimed that McClary's band name constituted fair use and asserted that CEC was interfering with McClary's ongoing business relationships. She demanded that CEC "cease and desist from contacting any venues that may book [her] client in the future and making similar unsubstantiated claims" regarding McClary's use of the marks.

         C.

         On August 19, 2014, CEC filed this action in the United States District Court for the Middle District of Florida claiming trademark infringement, trademark dilution, passing off, false advertising, and unfair competition. CEC also moved for a temporary restraining order or a preliminary injunction. McClary raised several counterclaims, alleging, among other things, intentional interference with present and prospective business relationships, trademark infringement, unfair competition, cancellation of a registered trademark, passing off, false advertising, misappropriation of likeness and identity, and defamation. McClary also claimed that CEC lacked standing, arguing that "Commodores Entertainment Corporation" is not a valid Nevada corporation because the Nevada corporation was registered as "Commodores Entertainment Corp." In addition, McClary asserted that the federal trademark registrations were invalid because they listed "Commodore Entertainment Corp." as the registrant rather than "Commodores Entertainment Corporation."

         The district court granted CEC's motion for a preliminary injunction, enjoining McClary from "using any of the Marks at issue in a manner other than fair use, including performing under the name 'The Commodores featuring Thomas McClary' or 'The 2014 Commodores'" and concluding that CEC had shown a substantial likelihood of success on its claim of trademark infringement. After the injunction was entered, CEC learned that McClary and his band were advertising and marketing upcoming performances in the United Kingdom and Switzerland. CEC asked the district court to clarify the extraterritorial reach of its preliminary injunction. The trial court granted the motion and held that the injunction would have extraterritorial application because use of the marks overseas would have a substantial and negative impact on CEC, an American corporation. A panel of this Court affirmed the entirety of the preliminary injunction, finding "no error as to the district court's determination that CEC established a substantial likelihood of success on the merits." Commodores Entm't Corp. v. McClary, 648 Fed.Appx. 771, 777 (11th Cir. 2016) (per curiam).

          In a series of pretrial motions, CEC moved to strike one of McClary's expert witnesses, lawyer Richard Wolfe, claiming that his testimony amounted to improper legal opinions and conclusions. The district court limited Wolfe's testimony, excluding "any legal conclusions or opinions concerning the law." At the close of discovery, both parties unsuccessfully moved for summary judgment. The district court bifurcated the trial of the case sua sponte. Phase I would determine only the "ownership rights to the service marks and trade name at issue"; then, "[i]f necessary, Phase II w[ould] concern outstanding issues of infringement, liability, and damages."

         The trial began on July 25, 2016. After CEC rested, McClary unsuccessfully moved for judgment as a matter of law. McClary also unsuccessfully moved to dismiss the case for failure to join an indispensable party -- Ronald LaPread, an original member of The Commodores. McClary then presented his case, again offering the testimony of attorney Wolfe, but after reviewing Wolfe's expert report and taking testimony from Wolfe outside of the presence of the jury, the court excluded his testimony in its entirety. The defense rested on July 28, 2016, and its renewed motion for judgment as a matter of law was denied.

         CEC also moved for judgment as a matter of law; the district court granted the motion and discharged the jury. The court said that the record was "uncontroverted that Mr. McClary left the group known as the Commodores in or around 1984 to pursue a solo career"; that "Mr. McClary left behind all of his rights to the trademarks when he left the band in 1984"; and that "those rights remained with the group, including Mr. Orange and Mr. King." Later, the trial court issued a written order on the grant reiterating its conclusion that "no reasonable jury could conclude that: (1) Plaintiff does not own or have rights to the trademarks at issue; or (2) Mr. McClary does own or have rights to the trademarks." The district court observed that the "original members of 'The Commodores' acquired common law rights to the trademarks associated with the musical band once the band achieved public fame." However, McClary walked away from his rights to the marks when he left the band in 1984, and those rights remained with the group. Further, no reasonable juror could conclude that McClary had exercised any control over the quality and characteristics of the band since his departure. Finally, the court concluded that King and Orange made valid assignments of their ownership rights in the marks to CEC and that CEC now owns the rights to the marks. The district court also converted its preliminary injunction into a permanent one, again enjoining McClary from using the marks in any manner other than fair use, and entered final judgment for CEC.

         McClary moved to certify the grant of judgment as a matter of law to CEC and the denial of its motion to dismiss for failure to join an indispensable party for immediate interlocutory appeal. The district court certified only the order granting judgment as a matter of law to CEC. The court's certification did not reference McClary's motion to dismiss.

         McClary timely appealed from the district court's entry of judgment as a matter of law on the issue of trademark ownership, from the entry of a permanent injunction barring his use of the marks, and from the denial of ...


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